Active Desktop may be disabled at this entry:
HKCU\Software\Microsoft\Windows\CurrentVersion\Explorer\ShellState

Displayed if Active Desktop enabled and wallpaper not set by Group Policy:
HKCU\Software\Microsoft\Internet Explorer\Desktop\General\
"Wallpaper" = "C:\Documents and Settings\Laura\Local Settings\Application Data\Microsoft\Wallpaper1.bmp"

+ This report excludes default entries except where indicated.
+ To see *everywhere* the script checks and *everything* it finds,
launch it from a command prompt or a shortcut with the -all parameter.
+ The search for DESKTOP.INI DLL launch points on all local fixed drives
took 127 seconds.
---------- (total run time: 521 seconds)